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This Blog,its owner,creator & contributor is neither a research analyst nor an Investment Advisor and expressing opinion only as an Investor in Indian equities.He/She is not responsible for any loss arising out of any information,post or opinion appearing on this blog.Investors are advised to do own due diligence and/or consult financial consultant before acting on any such information.Author of this blog not providing any paid service and not sending bulk mails/SMS to anyone.

Monday, July 27, 2015

Sunday, July 26, 2015

MIC ELECTRONICS - is one stock suggested earlier around @
Rs.5 which is currently trading around Rs.23. Now , in a very important
development ,company informed that Leyard Optoelectronics, the word
leader in high end LED display products
expressed their intention to subscribe 20 Million shares and 30
Million warrants @ Rs.25 .In addition to this, 3 million warrants will be
allotted to another individual at the same price . This fund infusion ( Approx: Rs.135 Cr) will help
the company to address much needed working capital and other funding
requirements. Technical ,Manufacturing and Marketing support of a world leader
is expected to give a new lease of life to MIC .Leyard is the company which
supplied display products
used for the opening ceremony of 2008 Olympic Games held in China and its stock listed in Chinese stock Exchange. I expect better days for MIC's share holders who kept faith in the company and resist the temptation to trade with it for some quick penny.

Saturday, July 25, 2015

The lure of big money has always thrown investors into the lap of stock markets.However, making money in equities is not easy. It not only requires oodles of patience and discipline, but also a great deal of research and a sound understanding of the market, among others. Added to this is the fact that stock market volatility in the last few years has left investors in a state of confusion. They are in a dilemma whether to invest, hold or sell in such a scenario. Although no sure-shot formula has yet been discovered for success in stock markets, here are some golden rules which,if followed prudently, may increase your chances of getting a good return

1. Avoid the herd mentality:

The typical buyer's decision is usually heavily influenced by the actions of his acquaintances, neighbors or relatives. Thus, if everybody around is investing in a particular stock, the tendency for potential investors is to do the same.But this strategy is bound to backfire in the long run. No need to say that you Should always avoid having the herd mentality if you don't want to lose your hard-earned money in stock markets. The world's greatest investor Warren Buffett was surely not wrong when he said, 'Be fearful when others are greedy,and be greedy when others are fearful!'

2 Take informed decision :

Proper research should always be undertaken before investing in stocks. But that is rarely done. Investors generally go by the name of a company or the industry they belong to. This is, however, not the right way of putting one’s money into the stock market.

3 Invest in business you understand :

Never invest in a stock. Invest in a business instead. And invest in a business you understand. In other words, before investing in a company, you should know what business the company is in.

4. Don't try to time the market:

One thing that even Warren Buffett doesn't do is to try to time the stock market,although he does have a very strong view on the price levels appropriate to individual shares. A majority of investors, however, do just the opposite, something that financial planners have always been warning them to avoid, and thus lose their hard-earned money in the process. 'So, you should never try to time the market. In fact, nobody has ever done this successfully and consistently over multiple business or stock market cycles.Catching the tops and bottoms is a myth. It is so till today and will remain so in the future. In fact, in doing so, more people have lost far more money than people who have made money

5. Follow a disciplined investment approach:

Historically it has been witnessed that even great bull runs have shown bouts ofpanic moments. The volatility witnessed in the markets has inevitably made investors lose money despite the great bull runs.However, the investors who put in money systematically, in the right shares and held on to their investments patiently have been seen generating outstanding returns. Hence, it is prudent to have patience and follow a disciplined investment approach besides keeping a long-term broad picture in mind.

6. Do not let emotions cloud your judgement:

Many investors have been losing money in stock markets due to their inability to control emotions, particularly fear and greed. In a bull market, the lure of quick wealth is difficult to resist. Greed augments when investors hear stories of fabulous returns being made in the stock market in a short period of time. 'This leads them to speculate, buy shares of unknown companies or create heavy positions in the futures segment without really understanding the risks involved,' says Kapur.Instead of creating wealth, these investors thus burn their fingers very badly the moment the sentiment in the market reverses.In a bear market, on the other hand, investors panic and sell their shares at rock-bottom prices. Thus, fear and greed are the worst emotions to feel when investing, and it is better not to be guided by them.

7 Create a broad portfolio :

Diversification of portfolio across asset classes and instruments is the key factor to earn optimum returns on investments with minimum risk.Level of diversification depends on each investor's risk taking capacity

8. Have realistic expectations.

There's nothing wrong with hoping for the 'best' from your investments, but you could be heading for trouble if your financial goals are based on unrealistic assumptions.For instance, lots of stocks have generated more than 50 per cent returns during the great bull run of recent years. However, it doesn't mean that you should always expect the same kind of return from the stock markets. Therefore, when Warren Buffett says that earning more than 12 per cent in stock is pure dumb luck and you laugh at it, you're surelyinviting trouble for yourself.

9. Invest only your surplus fund:

If you want to take risk in a volatile market like this, then see whether you have surplus funds which you can afford to lose. It is not necessary that you will lose money in the present scenario. You investments can give you huge gains too in the months to come.But no one can be hundred percent sure. That is why you will have to take risk.No need to say that invest only if you are flush with surplus funds.

10. Monitor rigorously:

We are living in a global village. Any important event happening in any part of the world has an impact on our financial markets. Hence we need to constantly monitor our portfolio and keep affecting the desired changes in it. If you can't review your portfolio due to time constraint or lack of knowledge, then you should take the help of a good financial planner or someone who is capable of doing that. 'If you can't even do that, then stock investing is not for you. Better put your money in safe or less-risky instruments.

Tuesday, July 21, 2015

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Disclosures :

SEBI Research Analysts Registration Status of the Author : Not Registered

Status of shares of Bluestar Infotech : Holding

1) Whether the research analyst or research entity or his associate or his relative has any financial interest in the subject company - NO

2) whether the research analyst or research entity or its associates or relatives, have actual/beneficial ownership of one per cent. or more securities of the subject company, at the end of the month immediately preceding the date of publication of the research report or date of the public appearance -NO

3)) whether the research analyst or research entity or his associate or his relative, has any other material conflict of interest at the time of publication of the research report or at the time of public appearance-NO

4)whether RA or its associates have received any compensation from the subject company in the past twelve months -NO

5)Whether it or its associates have managed or co-managed public offering of securities for the subject company in the past twelve months - NO

6) whether it or its associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months- NO

7) whether it or its associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months -NO

8)Whether it or its associates have received any compensation or other benefits from the subject company or third party in connection with the research report.-NO

9) Whether it or its associates have received any compensation from the subject company in the past twelve months-NO

10) whether the subject company is or was a client during twelve months preceding the date of distribution of the research report and the types of services provided -NO

11) Whether the research analyst has served as an officer, director or employee of the subject company-NO

12)whether the research analyst or research entity has been engaged in market making activity for the subject company- NO

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BLUE STAR INFOTECH LTD - is one stock suggested around Rs.72 which hits its 52 week high today @ Rs.258. For the quarter ended June , on a consolidated basis ,company reported a top line of Rs.74 Cr v/s Rs.64 Cr and a net profit of Rs.7.26 Cr v/s Rs.3.10 Cr. Quarterly EPS is Rs.6.50 v/s Rs.2.54 compared with same period of last year..Company also decided to purchase the remaining 51 % stake in Blue Star Infotech Business Intelligence and Analytics Pvt Ltd ( Read it HERE).

In case of many small/mid size IT companies , promoter quality is a major concern . But I believe , in the case of Blue star Infotech that risk is minimum

Saturday, July 18, 2015

No
modern-day investment "sage" is better known than Peter Lynch. Not
only has his investment approach successfully passed the real-world performance
test, but he strongly believes that individual investors have a distinct
advantage over Wall Street and large money managers when using his approach.
Individual investors, he feels, have more flexibility in following this basic
approach because they are unencumbered by bureaucratic rules and short-term
performance concerns.

Mr.
Lynch developed his investment philosophy at Fidelity Management and Research,
and gained his considerable fame managing Fidelity’s Magellan Fund. The fund
was among the highest-ranking stock funds throughout Mr. Lynch’s tenure, which
began in 1977 at the fund’s launching, and ended in 1990, when Mr. Lynch
retired.

Peter
Lynch’s approach is strictly bottom-up, with selection from among companies
with which the investor is familiar, and then through fundamental analysis that
emphasizes a thorough understanding of the company, its prospects, its
competitive environment, and whether the stock can be purchased at a reasonable
price. His basic strategy is detailed in his best-selling book "One Up on
Wall Street" which provides individual investors with
numerous guidelines for adapting and implementing his approach. His most recent
book, "Beating the Street" [Fireside/Simon & Schuster
paperback, 1994], amplifies the theme of his first book, providing examples of
his approach to specific companies and industries in which he has invested.
These are the primary sources for this article.

The
Philosophy: Invest in What You Know

Lynch
is a "story" investor. That is, each stock selection is based on a
well-grounded expectation concerning the firm’s growth prospects. The
expectations are derived from the company’s "story"--what it is that
the company is going to do, or what it is that is going to happen, to bring
about the desired results.

The
more familiar you are with a company, and the better you understand its
business and competitive environment, the better your chances of finding a good
"story" that will actually come true. For this reason, Lynch is a
strong advocate of investing in companies with which one is familiar, or whose
products or services are relatively easy to understand. Thus, Lynch says he
would rather invest in "pantyhose rather than communications
satellites," and "motel chains rather than fiber optics."

Lynch
does not believe in restricting investments to any one type of stock. His
"story" approach, in fact, suggests the opposite, with investments in
firms with various reasons for favorable expectations. In general, however, he
tends to favor small, moderately fast-growing companies that can be bought at a
reasonable price.

Selection
Process

Lynch’s
bottom-up approach means that prospective stocks must be picked one-by-one and
then thoroughly investigated--there is no formula or screen that will produce a
list of prospective "good stories." Instead, Lynch suggests that
investors keep alert for possibilities based on their own experiences--for
instance, within their own business or trade, or as consumers of products.

The
next step is to familiarize yourself thoroughly with the company so that you
can form reasonable expectations concerning the future. However, Lynch does not
believe that investors can predict actual growth rates, and he is skeptical of
analysts’ earnings estimates.

Instead,
he suggests that you examine the company’s plans--how does it intend to
increase its earnings, and how are those intentions actually being fulfilled?
Lynch points out five ways in which a company can increase earnings: It can
reduce costs; raise prices; expand into new markets; sell more in old markets;
or revitalize, close, or sell a losing operation. The company’s plan to
increase earnings and its ability to fulfill that plan are its
"story," and the more familiar you are with the firm or industry, the
better edge you have in evaluating the company’s plan, abilities, and any
potential pitfalls.

Categorizing
a company, according to Lynch, can help you develop the "story" line,
and thus come up with reasonable expectations. He suggests first categorizing a
company by size. Large companies cannot be expected to grow as quickly as
smaller companies.

Next,
he suggests categorizing a company by "story" type, and he identifies
six:

Slow Growers: Large
and aging companies expected to grow only slightly faster than the U.S.
economy as a whole, but often paying large regular dividends. These are
not among his favorites.

Stalwarts: Large
companies that are still able to grow, with annual earnings growth rates
of around 10% to 12%; examples include Coca-Cola, Procter &
Gamble, and Bristol-Myers. If purchased at a good price, Lynch says he
expects good but not enormous returns--certainly no more than 50% in two
years and possibly less. Lynch suggests rotating among the companies,
selling when moderate gains are reached, and repeating the process with
others that haven’t yet appreciated. These firms also offer downside
protection during recessions.

Fast-Growers: Small,
aggressive new firms with annual earnings growth of 20% to 25% a year.
These do not have to be in fast-growing industries, and in fact Lynch
prefers those that are not. Fast-growers are among Lynch’s favorites, and
he says that an investor’s biggest gains will come from this type of
stock. However, they also carry considerable risk.

Cyclicals: Companies
in which sales and profits tend to rise and fall in somewhat predictable
patterns based on the economic cycle; examples include companies in the
auto industry, airlines and steel. Lynch warns that these firms can be
mistaken for stalwarts by inexperienced investors, but share prices of
cyclicals can drop dramatically during hard times. Thus, timing is crucial
when investing in these firms, and Lynch says that investors must learn to
detect the early signs that business is starting to turn down.

Turnarounds: Companies
that have been battered down or depressed--Lynch calls these
"no-growers"; his examples include Chrysler, Penn Central and
General Public Utilities (owner of Three Mile Island). The stocks of
successful turnarounds can move back up quickly, and Lynch points out that
of all the categories, these upturns are least related to the general
market.

Asset opportunities:
Companies that have assets that Wall Street analysts and others have
overlooked. Lynch points to several general areas where asset plays can
often be found--metals and oil, newspapers and TV stations, and patented
drugs. However, finding these hidden assets requires a real working
knowledge of the company that owns the assets, and Lynch points out that
within this category, the "local" edge--your own knowledge and
experience--can be used to greatest advantage.

Selection
Criteria

Analysis
is central to Lynch’s approach. In examining a company, he is seeking to
understand the firm’s business and prospects, including any competitive
advantages, and evaluate any potential pitfalls that may prevent the favorable
"story" from occurring. In addition, an investor cannot make a profit
if the story has a happy ending but the stock was purchased at a too-high
price. For that reason, he also seeks to determine reasonable value.

Here
are some of the key numbers Lynch suggests investors examine:

Year-by-year
earnings: The historical record of earnings should be examined for stability
and consistency. Stock prices cannot deviate long from the level of earnings,
so the pattern of earnings growth will help reveal the stability and strength
of the company. Ideally, earnings should move up consistently.

Earnings
growth: The growth rate of earnings should fit with the firm’s
"story"--fast-growers should have higher growth rates than
slow-growers. Extremely high levels of earnings growth rates are not
sustainable, but continued high growth may be factored into the price. A high
level of growth for a company and industry will attract a great deal of
attention from both investors, who bid up the stock, and competitors, who
provide a more difficult business environment.

The
price-earnings ratio: The earnings potential of a company is a primary
determinant of company value, but at times the market may get ahead of itself
and overprice a stock. The price-earnings ratio helps you keep your
perspective, by comparing the current price to most recently reported earnings.
Stocks with good prospects should sell with higher price-earnings ratios than
stocks with poor prospects.

The
price-earnings ratio relative to its historical average: Studying the pattern
of price-earnings ratios over a period of several years should reveal a level
that is "normal" for the company. This should help you avoid buying
into a stock if the price gets ahead of the earnings, or sends an early warning
that it may be time to take some profits in a stock you own.

The
price-earnings ratio relative to the industry average: Comparing a company’s
price-earnings ratio to the industry’s may help reveal if the company is a
bargain. At a minimum, it leads to questions as to why the company is priced
differently--is it a poor performer in the industry, or is it just neglected?

The
price-earnings ratio relative to its earnings growth rate: Companies with
better prospects should sell with higher price-earnings ratios, but the ratio
between the two can reveal bargains or overvaluations. A price-earnings ratio
of half the level of historical earnings growth is considered attractive, while
relative ratios above 2.0 are unattractive. For dividend-paying stocks, Lynch
refines this measure by adding the dividend yield to the earnings growth [in
other words, the price-earnings ratio divided by the sum of the earnings growth
rate and dividend yield]. With this modified technique, ratios above 1.0 are
considered poor, while ratios below 0.5 are considered attractive.

Ratio
of debt to equity : How much debt is on the balance sheet? A strong balance
sheet provides maneuvering room as the company expands or experiences trouble.
Lynch is especially wary of bank debt, which can usually be called in by the
bank on demand.

Net
cash per share: Net cash per share is calculated by adding the level of cash
and cash equivalents, subtracting long-term debt, and dividing the result by
the number of shares outstanding. High levels provide a support for the stock
price and indicate financial strength.

Dividends
& payout ratio: Dividends are usually paid by the larger companies, and
Lynch tends to prefer smaller growth firms. However, Lynch suggests that
investors who prefer dividend-paying firms should seek firms with the ability
to pay during recessions (indicated by a low percentage of earnings paid out as
dividends), and companies that have a 20-year or 30-year record of regularly
raising dividends.

Inventories:
Are inventories piling up? This is a particularly important figure for
cyclicals. Lynch notes that, for manufacturers or retailers, an inventory
buildup is a bad sign, and a red flag is waving when inventories grow faster
than sales. On the other hand, if a company is depressed, the first evidence of
a turnaround is when inventories start to be depleted.

When
evaluating companies, there are certain characteristics that Lynch finds
particularly favorable. These include:

The name is boring,
the product or service is in a boring area, the company does something
disagreeable or depressing, or there are rumors of something bad about the
company--Lynch likes these kinds of firms because their ugly duckling
nature tends to be reflected in the share price, so good bargains often
turn up. Examples he mentions include: Service Corporation International
(a funeral home operator--depressing); and Waste Management (a toxic waste
clean-up firm--disagreeable).

The company is a
spin-off--Lynch says these often receive little attention from Wall
Street, and he suggests that investors check them out several months later
to see if insiders are buying.

The fast-growing
company is in a no-growth industry--Growth industries attract too much interest
from investors (leading to high prices) and competitors.

The company is a niche
firm controlling a market segment or that would be difficult for a
competitor to enter.

The company produces a
product that people tend to keep buying during good times and bad--such as
drugs, soft drinks, and razor blades--More stable than companies whose
product sales are less certain.

The company is a user
of technology--These companies can take advantage of technological
advances, but don’t tend to have the high valuations of firms directly
producing technology, such as computer firms.

There is a low
percentage of shares held by institutions, and there is low analyst
coverage--Bargains can be found among firms neglected by Wall Street.

The company is buying
back shares--Buybacks become an issue once companies start to mature and
have cash flow that exceeds their capital needs. Lynch prefers companies that
buy their shares back over firms that choose to expand into unrelated
businesses. The buyback will help to support the stock price and is
usually performed when management feels share price is favorable.

Characteristics
Lynch finds unfavorable are:

Hot stocks in hot
industries.

Companies
(particularly small firms) with big plans that have not yet been proven.

Companies in which one
customer accounts for 25% to 50% of their sales.

Portfolio
Building and Monitoring

As
portfolio manager of Magellan, Lynch held as many as 1,400 stocks at one time.
Although he was successful in juggling this many stocks, he does point to
significant problems of managing such a large number of stocks. Individual
investors, of course, will get nowhere near that number, but he is wary of
over-diversification just the same. There is no point in diversifying just for
the sake of diversifying, he argues, particularly if it means less familiarity
with the firms. Lynch says investors should own however many "exciting
prospects" that they are able to uncover that pass all the tests of
research. Lynch also suggests investing in several categories of stocks as a
way of spreading the downside risk. On the other hand, Lynch warns against
investment in a single stock.

Lynch
is an advocate of maintaining a long-term commitment to the stock market. He
does not favor market timing, and indeed feels that it is impossible to do so.
But that doesn’t necessarily mean investors should hold onto a single stock
forever. Instead, Lynch says investors should review their holdings every few
months, rechecking the company "story" to see if anything has changed
either with the unfolding of the story or with the share price. The key to
knowing when to sell, he says, is knowing "why you bought it in the first
place." Lynch says investors should sell if:

The story has played
out as expected and this is reflected in the price; for instance, the
price of a stalwart has gone up as much as could be expected.

Something in the story
fails to unfold as expected or the story changes, or fundamentals
deteriorate; for instance, a cyclical’s inventories start to build, or a
smaller firm enters a new growth stage.

For Lynch,
a price drop is an opportunity to buy more of a good prospect at cheaper
prices. It is much harder, he says, to stick with a winning stock once the
price goes up, particularly with fast-growers where the tendency is to sell too
soon rather than too late. With these firms, he suggests holding on until it is
clear the firm is entering a different growth stage.

Rather
than simply selling a stock, Lynch suggests "rotation"--selling the
company and replacing it with another company with a similar story, but better
prospects. The rotation approach maintains the investor’s long-term commitment
to the stock market, and keeps the focus on fundamental value.

Summing
It Up

Lynch
offers a practical approach that can be adapted by many different types of investors,
from those emphasizing fast growth to those who prefer more stable,
dividend-producing investments. His strategy involves considerable hands-on
research, but his books provide lots of practical advice on what to look for in
an individual firm, and how to view the market as a whole.

Lynch
sums up stock investing and his outlook best:

"Frequent
follies notwithstanding, I continue to be optimistic about America, Americans,
and investing in general. When you invest in stocks, you have to have a basic
faith in human nature, in capitalism, in the country at large, and in future
prosperity in general. So far, nothing’s been strong enough to shake me out of
it."

The
Peter Lynch Approach in Brief

Philosophy
and style

Investment
in companies in which there is a well-grounded expectation concerning the
firm’s growth prospects and in which the stock can be bought at a reasonable
price. A thorough understanding of the company and its competitive
environment is the only "edge" investors have over other investors
in finding reasonably valued stocks.

Criteria
for initial consideration

Select
from industries and companies with which you are familiar and have an
understanding of the factors that will move the stock price. Make sure you
can articulate a prospective stock’s "story line"-the company’s
plans for increasing growth and any other series of events that will help the
firm-and make sure you understand and balance them against any potential
pitfalls. Categorizing the stocks among six major "story" lines is
helpful when evaluating prospective stocks. Specific factors depend on the
firm’s "story," but these factors should be examined:

Year-by-year
earnings: Look for stability and consistency, and an upward trend.

P/E relative to
historical average: The price-earnings ratio should be in the lower
range of its historical average.

P/E relative to
industry average: The price-earnings ratio should be below the industry
average.

P/E relative to
earnings growth rate: A price-earnings ratio of half the level of historical
earnings growth is attractive; relative ratios above 2.0 are
unattractive. For dividend-paying stocks, use the price-earnings ratio
divided by the sum of the earnings growth rate and dividend yield-ratios
below 0.5 are attractive, ratios above 1.0 are poor.

Net cash per share:
The net cash per share relative to share price should be high.

Dividends and payout
ratio: For investors seeking dividend-paying firms, look for a low
payout ratio (earnings per share divided by dividends per share) and long
records (20 to 30 years) of regularly raising dividends.

Inventories:
Particularly important for cyclicals, inventories that are piling up are
a warning flag, particularly if growing faster than sales.

Debt-equity ratio:
The company’s balance sheet should be strong, with low levels of debt
relative to equity financing, and be particularly wary of high levels of
bank debt

Other
favorable characteristics

The name is boring,
the product or service is in a boring area, the company does something
disagreeable or depressing, or there are rumors of something bad about
the company.

The company is a
spin-off.

The fast-growing
company is in a no-growth industry.

The company is a
niche firm controlling a market segment.

The company produces
a product that people tend to keep buying during good times and bad.

The company can take
advantages of technological advances, but is not a direct producer of
technology.

The is a low
percentage of shares held by institutions and there is low analyst
coverage.

Insiders are buying
shares.

The company is
buying back shares.

Unfavorable
characteristics

Hot stocks in hot
industries.

Companies
(particularly small firms) with big plans that have not yet been proven.

Companies in which
one customer accounts for 25% to 50% of their sales.

Stock
monitoring and when to sell

Do not diversify
simply to diversify, particularly if it means less familiarity with the
firms. Invest in whatever number of firms is large enough to still allow
you to fully research and understand each firm. Invest in several
categories of stock for diversification.

Review holdings
every few months, rechecking the company "story" to see if
anything has changed. Sell if the "story" has played out as
expected or something in the story fails to unfold as expected or
fundamentals deteriorate.

Price drops usually
should be viewed as an opportunity to buy more of a good prospect at cheaper
prices.

Consider
"rotation"-selling played-out stocks with stocks with a
similar story, but better prospects. Maintain a long-term commitment to
the stock market and focus on relative fundamental values.